<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[X] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
NATIONAL CITY BANCSHARES, INC.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
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(4) Date filed:
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<PAGE> 2
NATIONAL CITY BANCSHARES, INC.
227 MAIN STREET
EVANSVILLE, INDIANA 47708
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 20, 1998
TO THE HOLDERS OF SHARES OF COMMON STOCK:
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Shareholders of NATIONAL
CITY BANCSHARES, INC. (the "Corporation") will be held in the Casino Aztar
Hotel, Mezzanine Meeting Rooms, 421 N.W. Riverside Drive, Evansville, Indiana,
on Wednesday, May 20, 1998, at 9:30 a.m., C.D.T., for the purpose of considering
and voting upon the following matters:
1. The election of three directors in Class III, each to serve a term
expiring at the 2001 Annual Meeting of Shareholders.
2. To consider and act upon a proposal to amend and restate the Articles of
Incorporation to (i) increase the number of the Corporation's authorized
common shares from 20,000,000 to 29,000,000, (ii) authorize 1,000,000
preferred shares, (iii) eliminate cumulative voting in elections of
directors, and (iv) revise certain other provisions.
3. Whatever other business that may be brought before the meeting or any
adjournment thereof. The Board of Directors at present knows of no other
business to be presented by or on behalf of the Corporation.
Shareholders of record at the close of business on March 23, 1998, are the only
shareholders entitled to notice of and to vote at the meeting.
By Order of the Board of Directors,
STEPHEN C. BYELICK, JR., Secretary
April 20, 1998
IMPORTANT
WHETHER YOU EXPECT TO ATTEND THE MEETING OR NOT, PLEASE MARK, SIGN, DATE, AND
RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED SELF-ADDRESSED ENVELOPE AS
PROMPTLY AS POSSIBLE. NO POSTAGE IS REQUIRED.
<PAGE> 3
NATIONAL CITY BANCSHARES, INC.
EVANSVILLE, INDIANA
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of National City Bancshares, Inc. (the "Corporation") of
Proxies to be voted at the Annual Meeting of Shareholders to be held on
Wednesday, May 20, 1998, in accordance with the foregoing notice.
The Corporation is a bank holding company with thirteen banks, a leasing
company, and a property management company, all of which are wholly-owned
subsidiaries.
The solicitation of Proxies on the enclosed form is made on behalf of the Board
of Directors of the Corporation. All cost associated with the solicitation will
be borne by the Corporation. The Corporation does not intend to solicit Proxies
other than by use of the mails, but certain officers and employees of the
Corporation or its subsidiaries, without additional compensation, may use their
personal efforts by telephone or otherwise, to obtain Proxies. The Proxy
materials are first being mailed to shareholders on or about April 20, 1998.
Any shareholder executing a Proxy has the right to revoke it by the execution of
a subsequently dated Proxy, by written notice delivered to the Secretary of the
Corporation prior to the exercise of the Proxy or in person by voting at the
meeting. The shares will be voted in accordance with the direction of the
shareholder as specified on the Proxy. In the absence of instructions, the Proxy
will be voted "FOR" the election of the three persons listed in this Proxy
Statement; and "FOR" the proposed Restated Articles of Incorporation.
VOTING SECURITIES
Only shareholders of record at the close of business on March 23, 1998, will be
eligible to vote at the Annual Meeting or any adjournment thereof. As of March
23, 1998, the Corporation had outstanding 10,751,557 shares of common stock,
without par value. On all matters including the election of directors, each
shareholder will have one vote for each share held. In electing directors, each
shareholder has the right to cumulate the shareholder's votes. Cumulative voting
permits a shareholder to multiply the number of shares held by the number of
directors to be elected and to cast those votes for one candidate or spread
those votes among several candidates. Unless the shareholder specifies
otherwise, the persons named in the enclosed Proxy will allocate votes in their
discretion among the nominees for director for whom they are authorized to vote.
A quorum will be present if the holders of one-third of the outstanding shares
of common stock are present at the meeting, in person, or by Proxy. Directors
will be elected by a plurality of the votes cast by the shares entitled to vote
in the election at the meeting. Approval of the Restated Articles of
Incorporation requires the affirmative vote of a majority of the shares
entitled to be voted at the meeting.
1
<PAGE> 4
A Proxy may indicate that all or a portion of the shares represented by such
Proxy are not being voted with respect to a specific proposal. This could
occur, for example, when a broker is not permitted to vote shares held in
street name on certain proposals in the absence of instructions from the
beneficial owner. Shares that are not voted with respect to a specific proposal
will be considered as not present and entitled to vote on such proposals, even
though such shares will be considered present for purposes of determining a
quorum and voting on other proposals. Abstentions on a specific proposal will
be considered as present, but not as voting in favor of such proposal. The
non-voting of shares or abstentions will not affect the election of directors
because the election does not require the affirmative vote of a specified
percentage of outstanding shares. The non-voting of shares or abstentions with
respect to the proposed Restated Articles of Incorporation will have the
practical effect of voting against the amendment and restatement since the
affirmative vote of a majority of the Corporation's outstanding common shares
is required for adoption of the proposal.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the number of shares of common stock of the
Corporation beneficially owned by the directors, the Named Executive Officers
listed in "Compensation of Executive Officers," and all directors and executive
officers as a group as of March 23, 1998.
<TABLE>
<CAPTION>
- ------------------------------------------------ ------------------------------ -----------------------
AMOUNT AND NATURE OF PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) CLASS
- ------------------------------------------------ ------------------------------ -----------------------
<S> <C> <C>
Janice L. Beesley 60,622 (2) *
Benjamin W. Bloodworth 18,934 (3) *
Michael F. Elliott 338,125 (4) 3.13%
Susanne R. Emge 24,376 (5) *
Donald G. Harris 11,989 *
H. Ray Hoops 845 *
Robert A. Keil 56,880 (6) *
John D. Lippert 71,797 (7) *
Harold A. Mann 48,469 (8) *
Ronald G. Reherman 9,026 (9) *
Laurence R. Steenberg 29,402 (10) *
Richard F. Welp 3,686 (11) *
All Directors and Executive
Officers as a Group (12 persons) 607,114 (12) 5.57%
- ------------------------------------------------ ------------------------------ -----------------------
</TABLE>
* Represents less than one percent.
(1) The nature of beneficial ownership, unless otherwise noted, represents sole
voting and investment power.
(2) Includes 56,212 shares with shared voting and investment power with spouse;
and 4,410 shares that may be purchased pursuant to options exercisable
within 60 days.
(3) All shares with sole voting and investment power by spouse.
(4) Includes 251,807 shares with sole voting and investment power; 16,680 shares
with shared voting and investment power with spouse; and 20,636 shares with
sole voting and investment power by spouse; 3,248 shares held by a trust
with shared voting and investment power; and 45,754 shares that may be
purchased pursuant to options exercisable within 60 days.
2
<PAGE> 5
(5) Includes 2,012 shares with sole voting and investment power; 14,763 shares
with shared voting and investment power with spouse; and 7,601 shares with
sole voting and investment power by spouse.
(6) Includes 11,126 shares with shared voting and investment powers with spouse;
and 45,754 shares that may be purchased pursuant to options exercisable
within 60 days.
(7) Includes 15,695 shares with sole voting and investment power; 8,274 shares
with sole voting and investment power by spouse; and 47,828 shares that may
be purchased pursuant to options exercisable within 60 days.
(8) Includes 1,137 shares with sole voting and investment power; 2,131 shares
with shared voting and investment power with spouse; and 45,201 shares that
may be purchased pursuant to options exercisable within 60 days.
(9) Includes 3,372 shares with sole voting and investment power; and 5,654
shares with shared voting and investment power with spouse.
(10) All shares are held in trust for a limited partnership of which Mr.
Steenberg is a general partner with sole voting and investment power.
(11) Includes 1,492 shares with sole voting and investment power; 2,194 shares
with shared voting and investment power with spouse.
(12) Includes 143,746 shares that may be purchased pursuant to options
exercisable within 60 days.
ITEM 1. ELECTION OF DIRECTORS AND
INFORMATION WITH RESPECT TO DIRECTORS AND OFFICERS
The following information is provided with respect to each nominee for director
and each present continuing director whose term of office extends beyond the
meeting.
Each of the nominees below currently serves as a director of the Corporation.
The Board of Directors has no reason to believe that any of the nominees will be
unable to serve if elected. If any nominee is unable to serve, the shares
represented by all valid Proxies will be voted for the election of such other
person as the Board may recommend.
3
<PAGE> 6
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING NOMINEES:
<TABLE>
<CAPTION>
DIRECTOR OF
NAME AND PRINCIPAL OCCUPATION CORPORATION
(PAST FIVE YEARS) AGE SINCE
- --------------------------------------------------------------------------------------------------------------------------------
CLASS III
<S> <C> <C>
The following are nominees for directorship in Class III of the Board of Directors, whose terms shall expire at the Annual
Meeting of Shareholders in 2001.
Dr. H. Ray Hoops 58 1996
President, University of Southern Indiana (1994 to Present);
Director, The National City Bank of Evansville (1993 to 1996);
Director, NCBE Leasing Corp. (1994 to Present); and
Vice Chancellor for Academic Affairs, University of Mississippi,
(1988-1994)
John D. Lippert 64 1985
Chairman of the Board and Chief Executive Officer of
the Corporation (1993 to December 1997);
Chairman of the Board, The National City Bank of
Evansville (1994 to 1996);
Chairman of the Board and Chief Executive Officer,
The National City Bank of Evansville (1993 to 1994);
Chairman of the Board, President, and Chief Executive Officer
of the Corporation and The National City Bank of Evansville
(1992 to 1993); Director, The National City Bank of Evansville
(1981 to 1996)
Ronald G. Reherman 61 1985
Chairman of the Board, President and Chief Executive Officer,
SIGCORP, Inc. (Gas and Electric Public Utility Holding Company)
(1996 to Present); Chairman of the Board, Southern Indiana
Gas and Electric Company (SIGECO) (Public Utility) (1992 to Present);
President and Chief Executive Officer, SIGECO (1990 to September 1997); and
Director, The National City Bank of Evansville (1985 to 1995)
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
DIRECTOR OF
NAME AND PRINCIPAL OCCUPATION CORPORATION
(PAST FIVE YEARS) AGE SINCE
- -------------------------------------------------------------------------------------------------------------------------------
CLASS I
(Continuing Directors with Term to Expire 1999)
<S> <C> <C>
Janice L. Beesley 44 1995
Chairman and Chief Executive Officer,
Alliance Bank (July 1997 to Present);
President and Chief Executive Officer,
United Federal Savings Bank (1992 to June 1997);
President, UniFed, Inc.
Director, First Federal Savings Bank of Leitchfield
(March 1997 to Present); and President and Chief Executive
Officer, United Financial Bancorp, Inc. (1992 to 1995)
Michael F. Elliott 46 1994
Chairman of the Board and Chief Executive Officer
(January 1, 1998 to Present), Vice Chairman of the Corporation (June 1997
to December 31, 1997),
Executive Vice President of the Corporation (1993 to June 19, 1997); Chairman
of the Board (1996 to Present), President (1994 to 1996), and Chief Executive
Officer (1994 to Present), The National City Bank of Evansville; Director and
Vice President, Twenty-One Southeast Third Corporation (1996 to Present);
Director, United Federal Savings Bank (1995 to 1996); Chairman of the Board
(1989 to 1996) and Chief Executive Officer (1989 to 1994), The State Bank of
Washington; and Chairman of the Board (1990 to 1993) and President and Chief
Executive Officer (1988 to 1993), Sure Financial Corporation
Donald G. Harris 65 1986
President and Treasurer, Harris Development Corp.
(1994 to Present);
Retired President, Mead Johnson Nutritional Group;
President, Mead Johnson Nutritional Group (1989 to 1993); and
Director, The National City Bank of Evansville (1986 to 1995)
Richard F. Welp 56 1998
Southwest Region Manager, Countrymark Cooperative, Inc.;
and Director, First Bank of Huntingburg
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
DIRECTOR OF
NAME AND PRINCIPAL OCCUPATION CORPORATION
(PAST FIVE YEARS) AGE SINCE
- ----------------------------------------------------------------------------------------------------------------------------
CLASS II
(Continuing Directors with Term to Expire 2000)
<S> <C> <C>
Susanne R. Emge 56 1985
Executive Director, St. Mary's Medical Center
Foundation of Evansville, Inc. (February 1997 to Present);
Senior Vice President - Community Relations and Trust
Manager, The National City Bank of Evansville
(1996 to February 1997);
Vice President for Corporate and Community Services,
Deaconess Hospital, Inc. (1990 to 1995);
Treasurer, Emge Realty Company, Inc.; and
Director, The National City Bank of Evansville (1979 to 1995)
Robert A. Keil 54 1993
President (1993 to Present) and Assistant Secretary and
Assistant Treasurer (1985 to 1993) of the Corporation; Director and President,
Twenty-One Southeast Third Corporation (1996 to Present); and Executive Vice
President, The National City Bank of Evansville and the Corporation (1991 to
1993)
Laurence R. Steenberg 59 1985
President, BST Incorporated (Oil Production);
President, Lot Resources (1996 to Present); Director, Rudolph Construction
Company (1996 to Present); Part Owner, World Connection Services, LLC,
(Internet services provider) (1994 to Present); Manager, World Connection
Services, LLC, (Internet services provider) (1994 to December 1997); Assistant
Professor of Management, University of Evansville (1989 to May 1997); and
Director, The National City Bank of Evansville (1983 to 1995)
</TABLE>
Unless otherwise indicated, each of the nominees and directors has had the same
position or another executive position with the same employer during the past
five years.
6
<PAGE> 9
COMMITTEES OF THE BOARD OF DIRECTORS
The Corporation has standing Compensation and Audit Committees, but does not
have a nominating committee.
In addition to the regular monthly meetings of the Board of Directors, some of
the directors also serve on one or more of the various Board committees. During
1997 the Board of Directors met twelve times. Each of the directors attended at
least 75% of the aggregate number of meetings of the Board and Committees on
which the director served.
The duties of the Compensation Committee are explained later under "Compensation
of Executive Officers."
The Audit Committee approves and reviews the internal audit programs of the
Corporation and its subsidiaries. The Audit Committee reviews the results of the
independent accountant's audit and reports to the Board of Directors. During
1997 the Audit Committee met five times and was comprised of five outside
directors and the members were as follows:
Ronald G. Reherman, Chairperson
Susanne R. Emge (since February 1997); Donald G. Harris; H. Ray
Hoops; and Laurence R. Steenberg
The Corporation's nominating function is performed by the Board of Directors.
Shareholders who wish to nominate persons for election as directors must comply
with the advance notice and eligibility requirements contained in Article III,
Section 9 of the Corporation's Bylaws, a copy of which is available on request.
Such request and any nominations should be addressed to the Secretary, National
City Bancshares, Inc., 227 Main Street, P. O. Box 868, Evansville, Indiana,
47705-0868.
Directors of the Corporation, other than those who also serve as a corporate or
subsidiary employee, received for their services an annual retainer of $8,000
plus $200 for each Board of Directors' meeting attended and $150 for each
committee meeting attended. Directors who serve as corporate or subsidiary
employees receive no separate compensation for Board service.
7
<PAGE> 10
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the compensation for the Chief Executive Officer
of the Corporation and the Corporation's four next most highly compensated
executive officers for the year ended December 31, 1997, hereinafter the "Named
Executive Officers."
<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term
Compensation
Annual Compensation Awards
------------------------- ----------------------
Securities
Underlying Options All Other
Name and Principal Position Year Salary Bonus (1) # Shares (2) Compensation
- ------------------------------------ --------- ----------------- ----------------- ---------------------- --------------------
<S> <C> <C> <C> <C> <C>
John D. Lippert* 1997 $312,600 $ ----- ----- $ 76,051 (3,4)
Chairman of the Board 1996 275,000 ----- ----- 128,042 (3,4,5)
and Chief Executive Officer 1995 230,000 ----- 66,150 68,969 (3,4)
Michael F. Elliott* 1997 215,929 34,650 21,000 18,397 (3)
Vice-Chairman 1996 165,000 31,500 11,025 22,500 (3)
1995 150,000 23,965 34,729 22,500 (3)
Robert A. Keil 1997 169,800 30,450 15,750 18,397 (3)
President 1996 145,000 26,880 11,025 22,500 (3)
1995 128,000 19,220 34,729 22,083 (3)
Benjamin W. Bloodworth* 1997 156,500 26,250 ----- 256,698 (3,6)
Executive Vice-President 1996 125,000 23,100 ----- 22,215 (3)
1995 110,000 17,394 46,305 19,109 (3)
Harold A. Mann 1997 90,000 17,850 ----- 12,401 (3)
Secretary and Treasurer 1996 85,000 16,800 ----- 15,270 (3)
1995 80,000 ----- 46,305 12,000 (3)
</TABLE>
* Mr. Lippert retired as Chairman of the Board and Chief Executive Officer on
December 31, 1997.
Mr. Elliott assumed Mr. Lippert's duties on January 1, 1998.
Mr. Bloodworth retired as Executive Vice President on December 31, 1997.
(1) Amounts shown represent amounts paid under the Management Incentive
Compensation Plan.
(2) Options granted have been adjusted for stock dividends and the two-for-one
stock split issued in April 1996.
(3) Amounts shown represent amounts contributed to the profit sharing plan
provided for all employees who complete one year of service.
(4) Includes a supplemental retirement contribution of $57,654, $51,547, and
$46,469, for 1997, 1996, and 1995, respectively.
(5) Includes $53,995 income realized from the exercise of non-qualified stock
options.
(6) Includes $234,301 income realized from the exercise of non-qualified stock
options.
8
<PAGE> 11
1997 Stock Option Grant Table
The following table sets forth the stock options granted to the Named Executive
Officers during 1997 under the Corporation's Incentive Stock Option Plan.
<TABLE>
<CAPTION>
Individual Grants
--------------------------------------------------------------------------------
Number of % of Total
Securities Options
Underlying Granted to Exercise
Options Employees Price (2) Expiration Grant Date
Name Granted (1) in 1997 Per Share Date Present Value (3)
---- ------------ ----------- --------- ---- -----------------
<S> <C> <C> <C> <C> <C>
Michael F. Elliott 21,000 19% $41.90 10/22/2007 $309,120
Robert A. Keil 15,750 14% $41.90 10/22/2007 $231,840
</TABLE>
(1) Options granted in 1997 were both incentive stock options and non-qualified
stock options exercisable one year after the date of grant. These options
become immediately exercisable in the event of a change in control of the
Corporation. These options were granted for a term of 10 years, subject to
earlier termination in certain events related to termination of employment.
The number of options and exercise prices in the table have been adjusted
for stock dividends.
(2) Exercise price is the fair market value on the date of grant, adjusted for
stock dividends.
(3) These values were established using the Black Scholes stock option valuation
model, modified to include dividends. Assumptions used to calculate the
Grant Date Present Value for options granted during 1997 were as follows:
(a) Expected Volatility - the variance in the percent change in stock price
during the 20-month period immediately preceding each grant, which was
21.50%.
(b) Risk Free Rate - the average monthly rate for 10-year U.S.Treasury
obligations during the month of grant as published in the Wall Street
Journal, which was 5.86%.
(c) Dividend Yield - the yield calculated by dividing the annualized
dividend rate of the Corporation's stock in the amount of $0.72 per
share by the fair market value of the stock on the date of grant, which
resulted in an assumed dividend yield of 1.71%.
(d) Time of Exercise - the maximum exercise period for each grant at the
time of the grant, which was 10 years.
9
<PAGE> 12
1997 Stock Option Exercises And Year-end Value Table
The following table sets forth the number and value of all unexercised stock
options held by the Named Executive Officers at year end.
<TABLE>
<CAPTION>
Value ($) of
Number (#) of Unexercised
Unexercised "in-the-money"
Options - Options -
12/31/97 12/31/97 (2)
------------- -------------
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise Realized ($) (1) Unexercisable Unexercisable
---- ----------- ---------------- ------------- -------------
<S> <C> <C> <C> <C>
John D. Lippert 1,500 $41,085 33,639/ $862,504/
23,153 $593,643
Benjamin W. Bloodworth 25,674 $309,500 3,912/ $100,304/
15,435 $395,753
Michael F. Elliott 0 0 45,754/ $1,101,360/
21,000 $59,850
Robert A. Keil 0 0 45,754/ $1,101,360/
15,750 $44,887
Harold A. Mann 1,050 $23,026 29,766/ $763,200/
15,435 $395,753
</TABLE>
(1) Value is calculated based on closing market price of the Corporation's
common stock at exercise date, less the exercise price.
(2) Value is calculated based on the closing market price of the common stock on
December 31, 1997, less the option exercise price.
10
<PAGE> 13
COMPENSATION PLANS
Pension Plan
The following table shows the estimated annual pension benefit payable to a
covered participant at normal retirement age (age 60) under the qualified
defined benefit pension plan covering the Corporation and all subsidiaries,
based on remuneration that is covered under the plan and years of service.
<TABLE>
<CAPTION>
PENSION PLAN TABLE
YEARS OF SERVICE
------------------------------------------------------------------------------------------
REMUNERATION 15 20 25 30 35 40
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$125,000 $ 37,500 $ 50,000 $ 62,500 $ 75,000 $ 87,500 $100,000
150,000 45,000 60,000 75,000 90,000 105,000 120,000
175,000 52,500 70,000 87,500 105,000 122,500 140,000
200,000 60,000 80,000 100,000 120,000 140,000 160,000
225,000 67,500 90,000 112,500 135,000 157,500 180,000
250,000 75,000 100,000 125,000 150,000 175,000 200,000
300,000 90,000 120,000 150,000 180,000 210,000 240,000
350,000 105,000 140,000 175,000 210,000 245,000 280,000
</TABLE>
(The benefits shown above may be limited by law.)
Covered compensation for John D. Lippert, Michael F. Elliott, and Robert A.
Keil, as of the end of the last calendar year, was limited by law and totaled
$160,000 each; and their years of service were eighteen years, three years, and
thirty-two years, respectively. Years of service for Benjamin W. Bloodworth and
Harold A. Mann were seventeen years and forty years, respectively.
Each employee who had completed one year of eligible service was an eligible
participant under the plan. The plan generally provided for a prospective
benefit calculated as follows: 2% of the average annual salary of the five
highest consecutive years within the last ten calendar years of credited service
for each year of credited service up to 40 years' maximum. "Average annual
salary" includes salary, bonus, and other amounts paid in cash to an eligible
participant. The plan provided for early retirement at age 55 with reduced
benefits or normal retirement with full benefits starting at age 60. The normal
form of pension payment is in the form of a life annuity. For a married
participant, the normal payment is in the form of a qualified joint and survivor
annuity benefit. Participants may elect to receive their accrued retirement
benefit in a single lump sum. The annual pension benefit is not subject to any
deduction for social security.
The plan was curtailed effective December 31, 1997. Employees who participated
in the plan became fully vested at December 31, 1997.
Profit Sharing Plan
The Corporation maintains a savings and profit sharing plan ("Profit Sharing
Plan") for substantially all full-time employees who have completed one year of
service. Employees may voluntarily contribute to the plan. The Corporation's
contributions to the plan, which is subject to the discretion of the Board of
Directors, cannot exceed 7% of the Corporation's net income before income taxes.
11
<PAGE> 14
Supplemental Retirement Benefit Agreement
During 1994 a supplemental retirement benefit agreement was signed between John
D. Lippert and The National City Bank of Evansville. The annual retirement
benefit of the Corporation's Chairman, John D. Lippert, was affected by recent
limitations imposed by the Internal Revenue Service. To compensate for this,
upon recommendation of the Corporation's Compensation Committee, the Board of
Directors of The National City Bank of Evansville established a supplemental
retirement plan for Chairman Lippert. This plan was moved to the Corporation
during 1995. The plan calls for annual payments to Chairman Lippert of $25,000
upon his retirement from the Corporation, but not sooner than his sixty-fifth
birthday.
Management Incentive Compensation Plan
The full Board of Directors approved the Management Incentive Compensation Plan
("Incentive Plan") for implementation in 1994. The purpose of the Incentive Plan
is to help improve overall Corporate performance by providing executives with
variable award opportunities in return for outstanding measured performance. The
Incentive Plan provides incentive opportunities based on the achievement of a
combination of corporate, subsidiary, and individual executive goals. Specific
measurable performance goals are established at the beginning of each year and
approved by the Compensation Committee. At the end of the year, actual
performance relative to the predetermined goals determines earned incentive
awards. The Corporation must exceed a threshold net income percentage before any
incentive payments are provided.
Incentive Stock Option Plan
On October 18, 1995, the Board of Directors adopted the Corporation's Incentive
Stock Option Plan (the "Option Plan"), which the shareholders approved on April
16, 1996. The Option Plan authorizes the Compensation Committee to award
incentive and non-qualified stock options to key employees of the Corporation
and its subsidiaries. The total number of shares of common stock reserved for
issuance under the Option Plan is currently 554,523 shares, subject to
antidilution adjustments. The Option Plan will terminate no later than October
18, 2005. At December 31, 1997, options to purchase an aggregate of 451,361
shares had been granted and were outstanding under the Option Plan.
REPORT OF THE COMPENSATION COMMITTEE
Compensation Committee Structure and Philosophy
During 1997 the Compensation Committee consisted of five outside Directors:
Laurence R. Steenberg, Chairperson;
Susanne R. Emge (since February 1997); Donald G. Harris; H. Ray
Hoops; and Ronald G. Reherman
The Committee met six times during the year, among other things, to establish
the compensation of the Corporation's executive officers.
The executive compensation program of the Corporation has been designed to
- Support a pay-for-performance policy that awards executive officers for
corporate performance;
- Motivate key senior officers to achieve strategic goals;
- Provide compensation opportunities which are comparable to those offered
by other comparable companies, thus allowing the Corporation to compete
for and retain talented executives who are critical to the Corporation's
long-term success.
Generally, compensation takes several forms, including base salary, cash bonuses
awarded in connection with the Incentive Plan, stock options granted in
connection with the Option Plan, and contributions to the Profit Sharing Plan.
12
<PAGE> 15
Base Salary
The Compensation Committee increased the base salary of the Named Executive
Officers during 1997 an average of 19%. During 1997 the Compensation Committee
retained McGladrey & Pullen, LLP, Certified Public Accountants and Consultants,
to evaluate the compensation and benefits paid to the Corporation's executive
officers and its subsidiaries' executive officers. The evaluation included a
comparison of compensation paid by the Corporation with compensation paid by
comparable regional financial institutions as published in established
compensation surveys. Based on (i) this evaluation, (ii) the Committee's
assessment of the Corporation's performance relative to its peers, and (iii) and
the executive officers' performance, the Compensation Committee elected to raise
base salaries for executive officers, including the Named Executive Officers.
Incentive Compensation
During 1996 the Corporation exceeded its net income target, and many executive
officers satisfied their personal performance goals of asset quality, expense
control, and growth of the Corporation; thus the Committee approved cash bonuses
under the Incentive Plan in 1997. Further, based on the purpose of the Option
Plan (encourage a proprietary interest through stock ownership), past
performance of the recipient, and the ability of the recipient to effect the
future of the Corporation, the Committee awarded incentive stock options,
including awards to Mr. Elliott and Mr. Keil.
CEO Compensation
John D. Lippert's base salary for 1997 was determined by the Compensation
Committee in accordance with the procedures described above; accordingly, his
salary for 1997 was increased 14% to $312,600. Mr. Lippert did not participate
in the Incentive Plan. Mr. Lippert received an additional $76,051 in
compensation as set forth in "Compensation of Executive Officers -- Summary
Compensation Table" pursuant to the Profit Sharing Plan and the Supplemental
Retirement Plan the Corporation entered with Mr. Lippert in 1994.
Michael F. Elliott became Chairman and Chief Executive Officer of the
Corporation effective January 1, 1998. He will receive compensation in such
capacity for 1998 in accordance with the procedures and standards described
above. During 1997 Mr. Elliott received the compensation described above and as
set forth in "Compensation of Executive Officers -- Summary Compensation Table".
Compensation Committee Interlocks and Insider Participation in Compensation
Decisions
No member of the Compensation Committee is involved in a relationship requiring
disclosure as an interlocking executive officer/director or under Item 404 of
Regulation S-K or as a former officer or employee of the Corporation.
This report on compensation is submitted by the Compensation Committee: Laurence
R. Steenberg, Chairperson; Susanne R. Emge; Donald G. Harris; H. Ray Hoops; and
Ronald G. Reherman.
13
<PAGE> 16
COMPARATIVE STOCK PERFORMANCE
The following is a line graph comparing the cumulative total shareholder return
among National City Bancshares, Inc. (NCBE); the Center for Research in
Securities Prices (CRSP), at the University of Chicago, Total Return Index for
Nasdaq Bank Stocks (NASDAQ BANKS); and the CRSP Total Return Index for The
Nasdaq Stock Market, U.S. Companies only, (NASDAQ STOCK MARKET). It assumes that
$100 is invested December 31, 1992, and all dividends are reinvested. Fiscal
year ending December 31 data is used. The shareholder return shown on the graph
is not necessarily indicative of future performance.
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
NCBE 100.00 128.56 164.59 181.19 239.23 391.35
NASDAQ BANKS 100.00 114.04 113.63 169.23 223.70 377.44
NASDAQ STOCK MARKET 100.00 114.79 112.21 158.68 195.19 239.63
</TABLE>
TRANSACTIONS WITH MANAGEMENT
Directors and officers (of the Corporation and its subsidiaries) and their
associates were customers of, and have had transactions with, the subsidiary
banks in the ordinary course of business during 1997. These transactions
consisted of extensions of credit by the subsidiaries in the ordinary course of
business and were made on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable transactions with
other persons. In the opinion of the management of the subsidiaries, those
transactions do not involve more than a normal risk of being collectible or
present other unfavorable features. The subsidiaries expect to have, in the
future, financial transactions in the ordinary course of its business with
directors, officers, and their associates on the same terms, including interest
rates and collateral on loans, as those prevailing at the time on comparable
transactions with others.
SECTION 16 (A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), requires the Corporation's executive officers and directors, and persons
who own more than 10% of a registered class of the Corporation's equity
securities, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission. Executive officers, directors, and greater
than 10% shareholders are required by SEC regulation to furnish the Corporation
with copies of all Section 16(a) forms they file.
Based solely on review of the copies of such forms furnished to the Corporation,
or written representations that no Forms 5 were required, the Corporation
believes that during 1997 all Section 16(a) filing requirements applicable to
its executive officers, directors, and greater than 10% beneficial owners were
complied with, except that one report covering one transaction was
filed late by Harold A. Mann.
14
<PAGE> 17
ITEM 2. PROPOSED RESTATEMENT OF THE
ARTICLES OF INCORPORATION
On March 18, 1998, the Board of Directors of the Corporation unanimously
approved certain amendments to the Corporation's Articles of Incorporation and
directed that proposed Restated Articles of Incorporation be submitted to
shareholders for consideration at the Annual Meeting. The amendments to result
from the restatement of the Articles are summarized below and would, among
other things, (i) increase the authorized common shares, (ii) authorize the
issuance of preferred shares, (iii) eliminate cumulative voting in elections of
directors, (iv) make various other changes that together may make more
difficult a change in control of the Corporation, (v) make other changes in
conformance with the provisions of the Indiana Business Corporation Law
("IBCL"). The summary is qualified in its entirety by reference to the existing
Articles of Incorporation of the Corporation, a copy of which is attached as
Exhibit A to this Proxy Statement (the "current Articles"), and the proposed
Restated Articles of Incorporation, which contains the proposed amendments, a
copy of which is attached as Exhibit B to this Proxy Statement (the "proposed
Articles").
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ADOPTION OF THE PROPOSED
RESTATED ARTICLES OF INCORPORATION.
Increased Authorized Common Shares
The Board of Directors has recommended amendment of the Articles of
Incorporation to increase the number of outstanding shares from 20,000,000
common shares, without par value (current Article V), to 29,000,000 common
shares, without par value, and 1,000,000 preferred shares, without par value
(proposed Article V).
Historically, the Corporation has issued shares primarily as the result of stock
splits and dividends, through its dividend reinvestment plan, and in acquisition
transactions. During 1997 the Corporation declared and paid a 5% common share
dividend. Over 47,000 common shares were issued through the dividend
reinvestment plan. Also during 1997, the Corporation issued 1,169,994
common shares in acquisition transactions. The Corporation has entered
definitive agreements under which it could issue up to an additional 2,755,555
common shares. As of March 23, 1998, there were 10,751,557 common shares
issued and outstanding.
The proposed increase in the number of common shares would insure that shares
will be available, if needed, for issuance in connection with share splits and
share dividends, for the dividend reinvestment plan, for acquisitions, and for
other corporate purposes. The Board believes that the availability of the
additional shares for such purposes without delay or the necessity for a special
shareholders' meeting would be beneficial to the Corporation. The Corporation
does not have any immediate plans, arrangements, commitments, or understandings
with respect to the issuance of any of the additional common shares that would
be authorized by the proposed amendments, other than for issuances in accordance
with prior practices for the purposes described above. No further action or
authorization by the Corporation's shareholders would be necessary prior to the
issuance of the additional shares of common stock unless required by applicable
law or regulatory agencies or by the rules of any market on which the
Corporation's securities may then be listed.
The holders of any of the additional common shares issued in the future would
have the same rights and privileges as the holders of common shares currently
authorized and outstanding. Those rights do not include preemptive rights with
respect to the future issuance of any additional shares.
As stated above, the Corporation does not have any immediate plans,
arrangements, commitments, or understandings with respect to the issuance of any
of the additional common shares that would be authorized by the proposed
amendments, other than for issuances in accordance with prior practices for the
purposes described above. However, the increased authorized shares could be used
to make a takeover attempt more difficult, such as by using the shares to make a
counter-offer for the shares of the bidder or by selling shares to dilute the
voting power of the bidder. As of this date, the Corporation is unaware of any
effort to accumulate the Corporation's shares or to obtain control of the
Corporation by means of a merger, tender offer, solicitation in opposition to
management or otherwise.
15
<PAGE> 18
Authorization of Preferred Shares
The Board also has recommended the authorization of 1,000,000 preferred shares
(proposed Article V). The Corporation currently has none. Under the proposed
Articles, the Board would have the right to establish the rights and preferences
of multiple series of preferred stock and to issue them without further
shareholder approval. Such series would have the voting rights (which may be
limited or unlimited), dividend or distribution rights, rights to priority in
relation to common shares or other series of preferred shares, redemption or
conversion prices, liquidation preferences, and sinking fund provisions as
determined by the Board.
The Board has recommended the authorization of preferred shares in order to
increase the Corporation's financial flexibility. The Board believes that the
complexity of modern business and financing and acquisition transactions
requires greater flexibility in the Corporation's capital structure than now
exists. The preferred shares would be available for issuance from time to time
as determined by the Board for any proper corporate purpose. Such purposes might
include, without limitation, issuance in public or private sales for cash as a
means of obtaining additional capital for use in the Corporation's business and
operations and issuance as part or all of the consideration required to be paid
by the Corporation for acquisitions of other businesses or properties. No
further action or authorization by the Corporation's shareholders would be
necessary prior to the issuance of the preferred shares unless required by
applicable law or regulatory agencies or by the rules of any market on which the
Corporation's securities may then be listed. The Corporation does not have any
immediate plans, agreements, understandings, or arrangements that would result
in the issuance of any preferred shares.
It is not possible to state the precise effect of the amendment upon the rights
of holders of common shares until the Board determines the respective
preferences, limitations, and relative rights of the holders of any future
series of preferred shares. However, such effects may include a dilution of the
voting power of common shares to the extent that such preferred shares have
voting rights, and may result in holders of preferred shares with preferences
and other rights superior to those of holders of common shares.
The proposed amendment may be viewed as having the effect of discouraging an
unsolicited attempt by another person or entity to acquire control of the
Corporation. Issuance of authorized preferred shares can be implemented, and has
been implemented by some companies in recent years, with voting or conversion
privileges intended to make acquisition of the company more difficult or more
costly. Such an issuance could be used to discourage or limit the shareholders'
participation in certain types of transaction that might be proposed (such as a
tender offer), whether or not such transactions were favored by the majority of
the shareholders. The shares could also be used in connection with the adoption
of a shareholder rights plan, which adoption would require no further
shareholder approval. A shareholder rights plan may provide that in the event of
certain business combinations, shareholders of the Corporation would receive the
right to purchase additional shares of the Corporation at a discount from the
market value. A potential acquiror may not be granted such rights and would face
dilution of voting power and devaluation of its shareholdings. Such a plan, or
the ability of the Corporation to adopt such a plan may, therefore, be viewed as
having possible anti-takeover effects. The Board has no present intention of
adopting a shareholders' rights plan. Further, as stated above, the Board is
unaware of any effort to accumulate the Corporation's shares or to obtain
control of the Corporation by means of a merger, tender offer, solicitation in
opposition to management, or otherwise.
Elimination of Cumulative Voting
The Board also has recommended that the Articles be amended to eliminate
cumulative voting for the election of directors. Under the current Articles,
each shareholder has a number of votes equal to the number of shares such
shareholder is entitled to vote multiplied by the number of directors to be
elected at the meeting (current Article IX). The shareholder may allocate such
votes to or among one or more nominees for director. The candidates receiving
the highest number of votes are elected. Cumulative voting may allow a
shareholder or group representing a small minority of votes cast to cause the
election of one or more nominees. Under the proposed Articles, cumulative voting
would be eliminated (proposed Article V). The availability of cumulative voting
may be deemed to create a vulnerability to takeover attempts, and its removal to
make such attempts more difficult. The Corporation is not aware of any attempt
by a shareholder or group to elect a director by using cumulative voting. The
Board has recommended the removal of cumulative voting because the Board
believes that the system of electing directors whereby those directors are
elected who receive a plurality of votes cast by shareholders as a whole will
best ensure that the Board will act for the benefit of all shareholders.
Changes Affecting Change in Control Transactions
In addition to the proposed increase in authorized common shares and the
proposed authorization of preferred shares (each of which may be viewed as
having the effect of discouraging an unsolicited attempt by another person or
entity to acquire control of the Corporation as described above), the proposed
Articles contain other features that may discourage an unsolicited attempt by
another person or entity to acquire control of the Corporation or to remove
current management, even if shareholders favored such attempts. One of the
purposes of the interrelated proposed amendments is to enhance the continuity
and stability of the Corporation's management by making it more difficult and
time-consuming for a third party to gain control of the Corporation's Board of
Directors. The Board believes that the proposed amendments would provide
16
<PAGE> 19
the Board with a better opportunity to respond to any unsolicited proposal and
to maximize the value available to the Corporation through such a transaction.
As discussed above, the Corporation is not aware of any effort to accumulate the
Corporation's shares or to obtain control of the Corporation. The Corporation's
current Articles provide for a classified Board and require the affirmative vote
of the holders of 80% of the issued and outstanding voting shares in order to
approve certain change in control transactions, unless such transactions have
been approved in advance by the Board (current Article IX). The proposed
Articles would retain these provisions, while clarifying that the latter
provision includes, along with mergers and consolidations, any sale, lease,
exchange, or other distribution of all or substantially all of the Corporation's
assets (proposed Article VIII).
The Board has recommended that the Articles be amended to provide that directors
of the Corporation may be removed from office only for good cause at a meeting
called for that purpose by the holders of outstanding shares representing at
least 66-2/3% of votes entitled to be cast at an election of directors (proposed
Article VII). "Good cause" means personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, or willful violation of any law, rule,
regulation (other than traffic violations or similar offenses). One effect of
the proposed amendment may be to make it more difficult for the holders of the
majority of the shares of the Corporation to remove incumbent directors. In
conjunction with the classified Board, the proposed change would make it more
difficult for someone who acquires voting shares of the Corporation immediately
to remove incumbent directors until their terms expire over the course of three
years.
The Board also has recommended that the maximum number of directors be fixed at
15 (proposed Article VII). The current Articles do not limit the number of the
Corporation's directors (current Article VII). Ten directors currently serve the
Corporation.. Imposing a limit on the number of directors in the Articles would
prevent a potential acquiror of the Corporation from expanding the number of
directors to undermine the influence of current directors. In conjunction with
the classified board and the proposed requirement of cause for removal of
directors, the limitation on the number of directors would make more difficult
any reduction in the influence of the current directors, whether in a takeover
attempt or otherwise.
The Board has recommended that the current Articles be amended to require a
shareholder who desires a special shareholder meeting to be called to provide a
written demand from the holders of shares representing at least 80% of votes
entitled to be cast on the issue proposed to be considered at the meeting (so
long as the Corporation has at least 50 shareholders) (proposed Article IX). The
current Articles do not provide for shareholders to call special meetings. Under
these circumstances, the default provisions of the IBCL provide that the demand
for a special meeting must be made by the holders of all votes entitled to be
cast; however, the Corporation has opted out of that default provision by a
provision of the Corporation's By-laws (which are subject to change by
unilateral Board action) that allows a special meeting to be called on the
request the holders of 25% of all shares outstanding and entitled to be cast.
The proposed Articles would supercede the By-laws with respect to this
provision. Accordingly, the increase in the number of holders of shares required
to call a meeting would make it more difficult to call a special meeting of
shareholders and, therefore, would mean that proposals for shareholder action
desired by shareholders could be delayed until the next annual meeting of
17
<PAGE> 20
shareholders. The proposed amendments would help assure that the Board, if
confronted with a surprise proposal from a third party that had acquired a
significant block of the Corporation's shares, would have additional time to
review any proposal and to consider appropriate alternatives.
Finally, the proposed Articles would allow the Corporation to redeem an
acquiror's "control shares" if the acquiror failed to file a statutory notice
regarding its acquisition when the Control Share provisions of the IBCL (the
"Control Provisions") apply to the Corporation. The current Articles do not
address the Control Provisions. The Control Provisions applies by default so
long as the Corporation qualifies under the Control Provisions as an "issuing
public corporation". When applicable, the Control Provisions, among other
things, give uninterested shareholders the right to vote to decide
whether an acquiror's "control shares" will be given voting power. The proposed
Articles would take advantage of an optional provision of the Control
Provisions, which allows the Corporation to redeem an acquiror's shares if the
acquiror fails to provide notices as required under the Control Provisions
(proposed Article X). The Board believes such notice should be given as
provided by the Control Provisions and desires to implement the Control
Provisions' incentive for such notice.
Other Changes
The proposed Articles are a full restatement of the current Articles.
Accordingly, the proposed Articles generally update, expand upon, and clarify
various provisions in a manner appropriate for a growing, publicly held
corporation. Shareholders are referred to the copy of the current Articles
(Exhibit A) and the proposed Articles (Exhibit B) attached to this Proxy
Statement. This section summarizes proposed changes not discussed above.
The Board of Directors has recommended the amendment of the Articles to simplify
and clarify the statement of the Corporation's purposes. The statement of
purposes in the proposed Articles (proposed Article II) makes clear that the
Corporation has the power to engage in business as a holding company for
financial institutions and other financial intermediaries and to engage in all
activities for which corporations may be incorporated under the IBCL. Such a
broad statement of purposes has become common in recent years and allows the
Corporation the full measure of authority available to it under the IBCL.
Outdated references to the Indiana General Corporation Act are replaced in the
proposed Articles by references to the IBCL. The Corporation's resident agent is
updated to reflect the fact that Stephen C. Byelick, Jr. has assumed this role
(proposed Article IV). Provisions no longer required in restated articles have
been removed, including requirements prior to doing business (current Article
VI), names and post office addresses of incorporators (current Article VII), and
the incorporator (current Article VIII). Some provisions of the current Articles
that merely restate or summarize IBCL default provisions or which are redundant
have been removed, including provisions relating to the Corporation's capital
structure (current Article IX), directors' reliance on books of the Corporation
(current Article IX), and indemnification (Article IX). The proposed Articles
also add provisions consistent with the IBCL that provide that meetings of
shareholders and directors may be held as may be provided for in the
Corporation's By-laws from time to time (proposed Article IX), that the Board
and shareholders may act without a meeting if action is taken by all members or
shareholders by written consent (proposed Article IX), and that shareholders
shall not have personal liability for the debts or actions of the Corporation
(proposed Article IX).
Current Articles I (name) and III (period of existence) remain unchanged.
Approval of a majority of the Corporations outstanding common shares is required
for adoption of the proposal to amend the Articles. If the proposal is adopted,
the amendments will become effective upon the requisite filing under the IBCL.
Abstentions from voting on the amendment and broker non-votes (i.e. shares held
by brokers or nominees that are represented at a meeting but with respect to
which the broker or nominee is not empowered to vote on a particular proposal)
will have the practical effect of voting against the amendment since the
affirmative vote of a majority of the Corporation's outstanding common shares is
required for adoption of the proposal. If not otherwise specified, properly
executed proxies will be voted in favor of the proposal.
18
<PAGE> 21
ITEM 3. OTHER MATTERS
The Board of Directors of the Corporation is not aware of any other matters that
may come before the meeting. However, the enclosed Proxy will confer
discretionary authority with respect to matters which are not known to the Board
of Directors at the time of printing hereof and which may properly come before
the meeting. A COPY OF THE CORPORATION'S 1997 REPORT FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION, ON FORM 10-K, WILL BE AVAILABLE WITHOUT CHARGE TO
SHAREHOLDERS UPON REQUEST WITHOUT CHARGE (EXCEPT FOR EXHIBITS, IF REQUESTED, FOR
WHICH A REASONABLE FEE WILL BE CHARGED). ADDRESS ALL REQUESTS, IN WRITING, FOR
THIS DOCUMENT TO STEPHEN C. BYELICK, JR., SECRETARY, NATIONAL CITY BANCSHARES,
INC., 227 MAIN STREET, P. O. BOX 868, EVANSVILLE, INDIANA 47705-0868.
INDEPENDENT PUBLIC ACCOUNTANTS
McGladrey & Pullen, LLP, Certified Public Accountants and Consultants served as
independent accountants to audit the financial statements of the Corporation and
its subsidiaries for the year 1997. McGladrey & Pullen, LLP, has audited the
books and records of the Corporation and its subsidiaries since 1993. A
representative of McGladrey & Pullen, LLP, is expected to be present at the
Annual Meeting and will have the opportunity to make a statement if desired and
to respond to appropriate questions from shareholders.
19
<PAGE> 22
SHAREHOLDER PROPOSALS
Any proposals to be considered for inclusion in the Proxy material to be
provided to shareholders of the Corporation for its next annual meeting to be
held in 1999 must be received by the Corporation no later than December 21,
1998.
INCORPORATION BY REFERENCE
To the extent this Proxy Statement has or will be specifically incorporated by
reference into any filing by the Corporation under the Securities Act of 1933,
as amended, or the Securities Exchange Act of 1934, as amended, the sections of
this Proxy Statement entitled "Report of the Compensation Committee" and
"Comparative Stock Performance" shall not be deemed to be so incorporated unless
specifically otherwise provided in any such filing.
By Order of the Board of Directors,
STEPHEN C. BYELICK, JR.
Secretary
April 20, 1998
20
<PAGE> 23
EXHIBIT "A"
CURRENT ARTICLES OF INCORPORATION AS AMENDED
ARTICLES OF INCORPORATION
OF
NATIONAL CITY BANCSHARES, INC.
The undersigned incorporator or incorporators, desiring to form a
corporation (hereinafter referred to as the "Corporation") pursuant to the
provisions of the Indiana General Corporation Act as amended (hereinafter
referred to as the "Act"), execute the following Articles of Incorporation:
ARTICLE I
Name
The name of the Corporation is National City Bancshares, Inc.
ARTICLE II
Purposes
The purposes for which the Corporation is formed are:
To engage in any lawful act or activity for which corporations may be
formed under the Indiana General Corporation Act and The Bank Holding Company
Act of 1956, as amended, and to possess all other rights and powers authorized
by the laws of the State of Indiana, and the laws of the United States of
America applicable to bank holding companies and the regulations of the Board of
Governors of the Federal Reserve System.
ARTICLE III
Period of Existence
The period during which the Corporation shall continue is perpetual.
ARTICLE IV
Resident Agent and Principal Office
Section 1. Resident Agent.
The name and address of the Corporation's Resident Agent for service of
process is Mr. Harold A. Mann, 227 Main Street, Evansville, Indiana 47708.
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<PAGE> 24
Section 2. Principal Office.
The post office address of the principal office of the Corporation is
227 Main Street, Evansville, Indiana 47708.
ARTICLE V
Authorized Shares
Section 1. Number of Shares:
The total number of shares which the Corporation is to have authority
to issue is 20,000,000, all of which the Corporation designates as without par
value.
Section 2. Terms of Shares:
Shares of the corporation may be redeemed by the corporation at the
direction of a vote of a majority of the Board of Directors meeting at a
regularly or specially called meeting for said purpose.
Furthermore, the corporation, through its Board of Directors, shall
have the power to purchase, hold, sell, and transfer the shares of its own
capital stock provided that it does not use its funds or property for the
purchase of its own shares of capital stock when such use will cause any
impairment of its capital, except when otherwise permitted by law, and provided
further that shares of its own capital stock belonging to it are not voted upon
directly, or indirectly.
ARTICLE VI
Requirements Prior To Doing Business
The Corporation will not commence business until consideration of the
value of at least $1,000 (one thousand dollars) has been received for the
issuance of shares.
ARTICLE VII
Directors
Section 1. Number of Directors:
The initial Board of Directors is composed of 14 members. The number of
directors may be from time to time fixed by the By-Laws of the Corporation at
any number. In the absence of a By-Law fixing the number of directors, the
number shall be fourteen (14).
22
<PAGE> 25
Section 2. Names and Post Office Addresses of the Directors:
The names and post office addresses of the initial Board of Directors
of the Corporation are:
<TABLE>
<CAPTION>
Name Number and Street or Building City State Zip Code
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gilbert E. Betulius Denzer Road, R.R. 13 Evansville IN 47712
Donald B. Cox 4029 Fairfax Road Evansville IN 47710
Wilfred O. Doerner 960 St. Michael Court Evansville IN 47715
Victor R. Gallagher 431 S. Rotherwood Avenue Evansville IN 47714
C. Mark Hubbard 3400 Robin Place Evansville IN 47712
Edgar P. Hughes Riverside 1, Apt. 505, 101 Court Street Evansville IN 47708
R. Eugene Johnson 6840 Arcadian Highway Evansville IN 47715
Edwin F. Karges, Jr. 1106 Harrelton Court Evansville IN 47715
John D. Lippert 3636 Elmridge Drive Evansville IN 47711
John Lee Newman 717 S. Boeke Road Evansville IN 47714
Laurence R. Steenberg 5688 Cliftmore Drive Newburgh IN 47630
C. Wayne Worthington 3023 Oak Hill Road Evansville IN 47711
George A. Wright 6001 Lincoln Avenue Evansville IN 47715
Mrs. N. Keith Emge 7108 E. Chestnut Street Evansville IN 47715
</TABLE>
Section 3. Qualification of Directors:
Directors of this corporation who serve as directors of any subsidiary
banking corporation may hold shares in this corporation as qualifying shares
entitling such directors to serve in the capacity as a director of such
subsidiary banking corporation.
ARTICLE VIII
Incorporator
The name and post office address of the incorporator of the Corporation
is Mr. Harold A. Mann, 227 Main Street, Evansville, Indiana 47708.
ARTICLE IX
Provisions for Regulation of Business
and Conduct of Affairs of Corporation
Section 1. Capital Structure.
The Board of Directors of the corporation is hereby authorized to fix
and determine and to vary the amount of working capital of the corporation, to
determine whether any and, if any, what part of its surplus, however created or
arising, shall be used or disposed of or declared in dividends or paid to
shareholders, and, without action by the Shareholders, to use and apply such
surplus or any part thereof at any time or from time to time in the purchase or
acquisition of shares of any class, voting trust certificates for shares, bonds,
debentures, notes script, warrants, obligations, evidences of indebtedness of
the corporation or other securities of the corporation, to such extent or amount
and in such manner and upon such terms as the Board of Directors of the
corporation shall deem expedient to the extent not prohibited by law.
23
<PAGE> 26
Section 2. Reliance on Books of the Corporation.
Each officer, director or member of any committee designated by the
Board of Directors of the corporation shall, in the performance of his duties,
be fully protected in relying in good faith upon the books of account or reports
made to the corporation by any of its officers or employees or by an independent
public accountant or by an appraiser selected with reasonable care by the Board
of Directors of the corporation or by any such committee or in relying in good
faith upon other records of the corporation.
Section 3. Indemnification.
The corporation shall have the power to indemnify its present and past
directors, officers, employees, or agents, and such other persons as it shall
have the powers to indemnify, to the full extent permitted under, and subject to
the limitations of, Title 23 of the Indiana General Corporation Act.
The corporation may upon the affirmative vote of a majority of its
Board of Directors, purchase insurance for the purpose of indemnifying its
directors, officers, employees and agents to the extent that such
indemnification is allowed in the statute mentioned above.
Any indemnification as above provided (unless ordered by a court) shall
be made by the corporation only as authorized in the specific case upon a
determination that indemnification is proper in the circumstances because it
meets the standard set out in the statute above mentioned. Such determination
shall be made (a) by the Board of Directors, by a majority vote of a quorum
consisting of directors who are not parties to such action, suit or proceeding;
or (b) if such a quorum is not obtainable, or even if obtainable, if majority
vote of disinterested directors so directs, by independent legal counsel in a
written opinion stating that such director, officer, employee or agent has met
such standards of conduct, or (c) by a majority vote of a quorum of the
shareholders of the corporation consisting of shareholders who are not parties
to such action, suit or proceeding.
Section 4. Voting Rights.
Each shareholder shall be entitled to one vote for each share of stock
standing in his name of the books of the corporation.
Each shareholder shall have the right to cumulate such voting power as
he possesses when electing directors, and to give one candidate as many votes as
the number of directors to be elected multiplied by the number of his votes
equals, or to distribute his votes on the same principle among two or more
candidates, as he sees fit.
Section 5. Classes of Directors.
The Bylaws of the Corporation may provide, that the Directors shall be
divided into two (2) or more classes whose terms of office shall expire at
different times, but no term shall continue longer than three (3) years.
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<PAGE> 27
Section 6. Voting Rights on Business Combinations.
Any merger, consolidation, or acquisition of this Corporation by
another corporation without this Corporation's Board of Directors' approval,
shall require the affirmative approval of the holders of eighty percent (80%) of
the issued and outstanding common shares of stock of the Corporation and eighty
percent (80%) of the issued and outstanding preferred shares or other class of
shares, regardless of limitations or restrictions on the voting power thereof,
entitled to vote at a meeting duly called for such purpose. Irrespective of any
other provisions of these Articles, this Section 6 may be amended at any regular
meeting or at a Special Meeting called for that purpose by the affirmative vote
of the holders of receipt of shares entitling them to exercise eighty percent
(80%) of the voting power on such proposal.
ARTICLE X
Except as otherwise restricted in Article IX, these Articles may be
amended at any regular meeting or at a special meeting called for that purpose
by the affirmative vote of the holders of record of shares entitling them to
exercise a majority of the voting power on such proposal.
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<PAGE> 28
EXHIBIT "B"
PROPOSED ARTICLES OF INCORPORATION
RESTATED ARTICLES OF INCORPORATION
OF
NATIONAL CITY BANCSHARES, INC.
National City Bancshares, Inc. (hereinafter referred to as the
"Corporation"), desiring to amend and restate its Articles of Incorporation
effective as of the date Articles of Restatement are submitted to the Indiana
Secretary of State for approval, pursuant to the provisions of the Indiana
Business Corporation Law (hereinafter referred to as the "Corporation Law"),
submits the following Restated Articles of Incorporation:
ARTICLE I
Name
The name of the Corporation is National City Bancshares, Inc.
ARTICLE II
Purposes and Powers
Section 1. Purposes of the Corporation.
The purposes for which the Corporation is formed are to (a) engage in
business as a holding company for financial institutions and other financial
intermediaries, and (b) engage in any lawful act or activity for which
corporations may now or hereafter be incorporated under the Corporation Law.
Section 2. Powers of the Corporation.
The Corporation shall have all powers now or hereafter authorized by or
vested in corporations pursuant to the provisions of the Corporation Law.
ARTICLE III
Period of Existence
The period during which the Corporation shall continue is perpetual.
ARTICLE IV
Resident Agent and Principal Office
Section 1. Resident Agent.
The name and address of the Corporation's Resident Agent for service of
process at the time of the adoption of these Restated Articles of Incorporation
is Mr. Stephen C. Byelick, Jr., 227 Main Street, Evansville, Indiana 47708.
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Section 2. Principal Office.
The post office address of the principal office of the Corporation at
the time of the adoption of these Restated Articles of Incorporation is P. O.
Box 868, Evansville, Indiana 47705-0868.
ARTICLE V
Authorized Shares
Section 1. Number of Shares.
The total number of shares that the Corporation has authority to issue
is 30,000,000, consisting of 29,000,000 Common Shares ("Common Shares"), and
1,000,000 Preferred Shares ("Preferred Shares"). The Common Shares and Preferred
Shares have no par or stated value, except that, solely for the purpose of any
statute or regulation of any jurisdiction imposing any tax or fee based upon the
capitalization of the Corporation, each of the Corporation's shares shall be
deemed to have a stated value of $1.00 per share.
Section 2. General Terms of All Shares.
(a) The Corporation shall have the power to acquire (by purchase,
redemption, or otherwise), hold, own, pledge, sell, transfer, assign, reissue,
cancel, or otherwise dispose of shares of the Corporation in the manner and to
the extent now or hereafter permitted by the Corporation Law (but such power
shall not imply an obligation on the part of the owner or holder of any share to
sell or otherwise transfer such share to the Corporation), including the power
to purchase, redeem, or otherwise acquire the Corporation's own shares, directly
or indirectly, and without pro rata treatment of the owners or holders of any
class or series of shares, unless, after giving effect thereto, the Corporation
would not be able to pay its debts as they become due in the usual course of
business or the Corporation's total assets would be less than its total
liabilities (and without regard to any amounts that would be needed, if the
Corporation were to be dissolved at the time of the purchase, redemption, or
other acquisition, to satisfy the preferential rights upon dissolution of
shareholders whose preferential rights are superior to those of the holders of
the shares of the Corporation being purchased, redeemed, or otherwise acquired,
unless otherwise expressly provided with respect to a series of Preferred Shares
in the provisions of these Restated Articles of Incorporation adopted by the
Board of Directors pursuant to Section 5 of this Article describing the terms of
such series). Shares of the Corporation purchased, redeemed, or otherwise
acquired by it shall constitute authorized but unissued shares, unless prior to
any such purchase, redemption, or other acquisition, or within thirty (30) days
thereafter, the Board of Directors adopts a resolution providing that such
shares constitute authorized and issued but not outstanding shares.
(b) The Board of Directors of the Corporation may dispose of, issue,
and sell shares in accordance with, and in such amounts as may be permitted by,
the Corporation Law and the provisions of these Restated Articles of
Incorporation and for such consideration, at such price or prices, at such time
or times and upon such terms and conditions (including the privilege of
selectively repurchasing the same) as the Board of Directors of the Corporation
shall determine, without the authorization or approval by any shareholders of
the Corporation. Shares may be disposed of, issued, and sold to such persons,
firms, or corporations as the Board of Directors may determine, without any
preemptive or other right on the part of the owners or holders of other shares
of the Corporation of any class or kind to acquire such shares by reason of
their ownership of such other shares.
(c) The Corporation shall have the power to declare and pay dividends
or other distributions upon the issued and outstanding shares of the
Corporation, subject to the limitation that a dividend or other distribution may
not be made if, after giving it effect, the Corporation would not be able to pay
its debts as they become due in the usual course of business or the
Corporation's total assets would be less than its total liabilities (and without
regard to any amounts that would be needed, if the Corporation were to be
dissolved at the time of the dividend or other distribution, to satisfy the
preferential rights upon dissolution of shareholders whose preferential rights
are superior to those of the holders of shares
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<PAGE> 30
receiving the dividend or other distribution, unless otherwise expressly
provided with respect to a series of Preferred Shares in the provisions of
these Restated Articles of Incorporation adopted by the Board of Directors
pursuant to Section 5 of this Article describing the terms of such series).
Except as otherwise provided in Section 4 of this Article, the Corporation
shall have the power to issue shares of one class or series as a share dividend
or other distribution in respect of that class or series or one or more other
classes or series.
Section 3. Voting Rights of Shares.
(a) Except as otherwise provided by the Corporation Law and subject to
such shareholder disclosure and recognition procedures (which may include voting
prohibition sanctions) as the Corporation may by action of its Board of
Directors establish, Common Shares have unlimited voting rights. Common Shares
shall not have cumulative voting rights.
(b) Preferred Shares shall, when validly issued by the Corporation,
entitle the record holder thereof to vote as and on such matters, but only as
and on such matters, as the holders thereof are entitled to vote under the
Corporation Law or under the provisions of these Restated Articles of
Incorporation adopted by the Board of Directors pursuant to Section 5 of this
Article describing the terms of the Preferred Shares or a series thereof (which
provisions may provide for special, conditional, limited, or unlimited voting
rights, including multiple or fractional votes per share, or for no right to
vote, except to the extent required by the Corporation Law) and subject to such
shareholder disclosure and recognition procedures (which may include voting
prohibition sanctions) as the Corporation may by action of the Board of
Directors establish.
Section 4. Other Terms of Common Shares.
Common Shares shall be equal in every respect insofar as their
relationship to the Corporation is concerned, but such equality of rights shall
not imply equality of treatment as to redemption or other acquisition of shares
by the Corporation. Subject to the rights of the holders of any outstanding
Preferred Shares issued under Section 5 of this Article, the holders of Common
Shares shall be entitled to share ratably in such dividends or other
distributions (other than purchases, redemptions, or other acquisitions of
shares by the Corporation), if any, as are declared and paid from time to time
on the Common Shares at the discretion of the Board of Directors. In the event
of any liquidation, dissolution, or winding up of the Corporation, either
voluntary or involuntary, after payment shall have been made to the holders of
the Preferred Shares of the full amount to which they shall be entitled under
this Article, the holders of Common Shares shall be entitled, to the exclusion
of the holders of the Preferred Shares of any and all series, to share, ratably
according to the number of shares of Common Shares held by them, in all
remaining assets of the Corporation available for distribution to its
shareholders.
Section 5. Other Terms of Preferred Shares.
(a) Preferred Shares may be issued from time to time in one or more
series, each such series to have such distinctive designation and such
preferences, limitations, and relative voting and other rights as shall be set
forth in these Restated Articles of Incorporation. Subject to the requirements
of the Corporation Law and subject to all other provisions of these Restated
Articles of Incorporation, the Board of Directors of the Corporation may create
one or more series of Preferred Shares and may determine the preferences,
limitations, and relative voting and other rights of one or more series of
Preferred Shares before the issuance of any shares of that series by the
adoption of an amendment to these Restated Articles of Incorporation that
specifies the terms of the series of Preferred Shares. All shares of a series of
Preferred Shares must have preferences, limitations, and relative voting and
other rights identical with those of other shares of the same series and, if the
description of the series set forth in these Restated Articles of Incorporation
so provides, no series of Preferred Shares need have preferences, limitations,
or relative voting or other rights identical with those of any other series of
Preferred Shares.
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Before issuing any shares of a series of Preferred Shares, the Board of
Directors shall adopt an amendment to these Restated Articles of Incorporation,
which shall be effective without any shareholder approval or other action, that
sets forth the preferences, limitations, and relative voting and other rights of
the series, and authority is hereby expressly vested in the Board of Directors,
by such amendment:
(1) To fix the distinctive designation of such series and the
number of shares which shall constitute such series, which number may be
increased or decreased (but not below the number of shares thereof then
outstanding) from time to time by action of the Board of Directors;
(2) To fix the voting rights of such series, which may consist
of special, conditional, limited, or unlimited voting rights, including
multiple or fractional votes per share, or no right to vote (except to
the extent required by the Corporation Law);
(3) To fix the dividend or distribution rights of such series
and the manner of calculating the amount and time for payment of
dividends or distributions, including, but not limited to:
(A) the dividend rate, if any, of such series;
(B) any limitations, restrictions, or conditions on the
payment of dividends or other distributions, including whether
dividends or other distributions shall be noncumulative or
cumulative or partially cumulative and, if so, from which date or
dates;
(C) the relative rights of priority, if any, of payment of
dividends or other distributions on shares of that series in
relation to Common Shares and shares of any other series of
Preferred Shares; and
(D) the form of dividends or other distributions, which may
be payable at the option of the Corporation, the shareholder, or
another person (and in such case to prescribe the terms and
conditions of exercising such option), or upon the occurrence of a
designated event in cash, indebtedness, shares or other securities
or other property, or in any combination thereof,
and to make provisions, in the case of dividends or other distributions
payable in shares or other securities, for adjustment of the dividend or
distribution rate in such events as the Board of Directors shall
determine;
(4) To fix the price or prices at which, and the terms and
conditions on which, the shares of such series may be redeemed or
converted, which may be
(A) at the option of the Corporation, the shareholder, or
another person or upon the occurrence of a designated event;
(B) for cash, indebtedness, securities, or other property or
any combination thereof; and
(C) in a designated amount or in an amount determined in
accordance with a designated formula or by reference to extrinsic
data or events;
(5) To fix the amount or amounts payable upon the shares of such
series in the event of any liquidation, dissolution, or winding up of the
Corporation and the relative rights of priority, if any, of payment upon
shares of such series in relation to Common Shares and shares of any
other series of special shares; and to determine whether or not any such
preferential rights upon dissolution need be considered in determining
whether or not the Corporation may make dividends, repurchases, or other
distributions;
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<PAGE> 32
(6) To determine whether or not the shares of such series shall be
entitled to the benefit of a sinking fund to be applied to the purchase
or redemption of such series and, if so entitled, the amount of such fund
and the manner of its application;
(7) To determine whether or not the issuance of any additional
shares of such series or of any other series in addition to such series
shall be subject to restrictions in addition to restrictions, if any, on
the issuance of additional shares imposed in the provisions of these
Restated Articles of Incorporation fixing the terms of any outstanding
series of Preferred Shares theretofore issued pursuant to this Section
and, if subject to additional restrictions, the extent of such additional
restrictions; and
(8) Generally to fix the other preferences or rights, and any
qualifications, limitations, or restrictions of such preferences or
rights, of such series to the full extent permitted by the Corporation
Law; provided, however, that no such preferences, rights, qualifications,
limitations, or restrictions shall be in conflict with these Restated
Articles of Incorporation or any amendment hereof.
(b) Preferred Shares of any series that have been redeemed
(whether through the operation of a sinking fund or otherwise) or purchased by
the Corporation, or which, if convertible, have been converted into shares of
the Corporation of any other class or series, may be reissued as a part of such
series or of any other series of Preferred Shares, subject to such limitations
(if any) as may be fixed by the Board of Directors with respect to such series
of Preferred Shares in accordance with subsection (a) of this Section.
ARTICLE VI
Reserved
ARTICLE VII
Directors
Section 1. Number.
The Board of Directors at the time of adoption of these Restated
Articles of Incorporation is composed of ten (10) members, which number may be
changed from time to time by amendment to the By-Laws, but which in no event
shall exceed fifteen (15). Whenever the By-Laws provide that the number of
Directors shall be three (3) or more, the By-Laws may also provide for
staggering the terms of the members of the Board of Directors by dividing the
total number of Directors into three (3) groups (with each group containing
one-third (1/3) of the total, as near as may be) whose terms of office expire at
different times.
Section 2. Qualifications.
Directors need not be shareholders of the Corporation or residents of
this or any other state in the United States. Directors of the Corporation who
serve as directors of any subsidiary banking corporation may hold shares in the
Corporation as qualifying shares entitling such directors to serve in the
capacity as a director of such subsidiary banking corporation.
Section 3. Vacancies.
Vacancies occurring in the Board of Directors shall be filled in the
manner provided in the By-Laws or, if the By-Laws do not provide for the filling
of vacancies, in the manner provided by the Corporation Law. The By-Laws may
also provide that in certain circumstances specified therein, vacancies
occurring in the Board of Directors may be filled by vote of the shareholders at
a special meeting called for that purpose or at the next annual meeting of
shareholders.
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Section 4. Removal of Directors.
Any or all of the members of the Board of Directors may be removed, for
good cause, only at a meeting of the shareholders called expressly for that
purpose, by the affirmative vote of the holders of outstanding shares
representing at least sixty-six and two-thirds percent (66-2/3%) of all the
votes then entitled to be cast at an election of Directors. Directors may not be
removed in the absence of good cause, which "good cause" shall mean personal
dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving
personal profit, intentional failure to perform stated duties, or willful
violation of any law, rule, regulation (other than traffic violations or similar
offenses).
Section 5. Election of Directors by Holders of Preferred Shares.
The holders of one (1) or more series of Preferred Shares may be
entitled to elect all or a specified number of Directors, but only to the extent
and subject to limitations as may be set forth in the provisions of these
Restated Articles of Incorporation adopted by the Board of Directors pursuant to
Section 5 of Article V hereof describing the terms of the series of Preferred
Shares.
ARTICLE VIII
Voting Rights Regarding Business Combinations
Section 1. Shareholder Vote Required.
The affirmative vote of the holders of not less than eighty percent
(80%) of the outstanding voting shares of the Corporation shall be required for
the approval or authorization of any (a) merger or consolidation of the
corporation with or into any other corporation, or (b) sale, lease, exchange, or
other disposition of all or substantially all of the assets of the Corporation
to any other corporation, person, or other entity; provided, however, that such
eighty percent (80%) voting requirement shall not be applicable if the Board of
Directors of the Corporation shall have approved such a transaction described in
(a) or (b) above by a resolution adopted by a majority of such Board of
Directors.
Section 2. Amendment.
Notwithstanding any other provision of the Restated Articles of
Incorporation, this Article may be amended only at a meeting of the shareholders
(called pursuant to Article IX, Section 1 or 2) by the affirmative vote of the
holders of shares entitling them to exercise eighty percent (80%) of the voting
power with respect to the transactions set forth in Section 1 of this Article.
ARTICLE IX
Provisions for Regulation of Business
and Conduct of Affairs of Corporation
Section 1. Meetings of Shareholders.
Meetings of the shareholders of the Corporation shall be held at such
time and at such place, either within or without the State of Indiana, as may be
stated in or fixed in accordance with the By-Laws of the Corporation and
specified in the respective notices or waivers of notice of any such meetings.
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Section 2. Special Meetings of Shareholders.
Special meetings of the shareholders, for any purpose or purposes,
unless otherwise prescribed by the Corporation Law, may be called at any time by
the Board of Directors or the officers authorized to do so by the By-Laws and
shall be called by the Board of Directors if the Secretary of the Corporation
receives one (1) or more written, dated, and signed demands for a special
meeting, describing in reasonable detail the purpose or purposes for which it is
to be held, from the holders of shares representing at least twenty-five percent
(25%) of all the votes entitled to be cast on any issue proposed to be
considered at the proposed special meeting; provided, however, that any such
demand(s) delivered to the Secretary at any time at which the Corporation has
more than 50 shareholders must be properly delivered by the holders of shares
representing at least eighty percent (80%) of all the votes entitled to be cast
on any issue proposed to be considered at the proposed special meeting. If the
Secretary receives one (1) or more proper written demands for a special meeting
of shareholders, the Board of Directors may set a record date for determining
shareholders entitled to make such demand.
Section 3. Meetings of Directors.
Meetings of the Board of Directors of the Corporation shall be held at
such place, either within or without the State of Indiana, as may be authorized
by the By-Laws and specified in the respective notices or waivers of notice of
any such meetings or otherwise specified by the Board of Directors. Unless the
By-Laws provide otherwise, (a) regular meetings of the Board of Directors may be
held without notice of the date, time, place, or purpose of the meeting and (b)
the notice for a special meeting need not describe the purpose or purposes of
the special meeting.
Section 4. Action without Meeting.
Any action required or permitted to be taken at any meeting of the
Board of Directors or shareholders, or of any committee of such Board, may be
taken without a meeting, if the action is taken by all members of the Board or
all shareholders entitled to vote on the action, or by all members of such
committee, as the case may be. The action must be evidenced by one (1) or more
written consents describing the action taken, signed by each Director, or all
the shareholders entitled to vote on the action, or by each member of such
committee, as the case may be, and, in the case of action by the Board of
Directors or a committee thereof, included in the minutes or filed with the
corporate records reflecting the action taken or, in the case of action by the
shareholders, delivered to the Corporation for inclusion in the minutes or
filing with the corporate records. Action taken under this Section is effective
when the last Director, shareholder, or committee member, as the case may be,
signs the consent, unless the consent specifies a different prior or subsequent
effective date, in which case the action is effective on or as of the specified
date. Such consent shall have the same effect as a unanimous vote of all members
of the Board, or all shareholders, or all members of the committee, as the case
may be, and may be described as such in any document.
Section 5. Nonliability of Shareholders.
Shareholders of the Corporation are not personally liable for the acts
or debts of the Corporation, nor is private property of shareholders subject to
the payment of corporate debts.
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ARTICLE X
Miscellaneous Provisions
Section 1. Amendment or Repeal.
Except as otherwise expressly provided in these Restated Articles of
Incorporation the Corporation shall be deemed, for all purposes, to have
reserved the right to amend, alter, change, or repeal any provision contained in
these Restated Articles of Incorporation to the extent and in the manner now or
hereafter permitted or prescribed by statute, and all rights herein conferred
upon shareholders are granted subject to such reservation.
Section 2. Redemption of Shares Acquired in Control Share Acquisitions.
If and whenever the provisions of IC 23-1-42 apply to the Corporation,
it is authorized to redeem its securities pursuant to IC 23-1-42-10.
Section 3. Captions.
The captions of the Articles and Sections of these Restated Articles of
Incorporation have been inserted for convenience of reference only and do not in
any way define, limit, construe, or describe the scope or intent of any Article
or Section hereof.
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PROXY
<TABLE>
<CAPTION>
<S> <C>
NATIONAL CITY BANCSHARES, INC. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
227 Main Street, P. O. Box 868 The undersigned hereby appoints Waller S. Clements, Ole J. Olsen, Jr., Esq., and David
Evansville, IN 47705-0868 L. Woll, Esq. Proxies, each with the power to appoint his or her substitute, and hereby
authorizes them to represent and to vote as below, all the shares of Common Stock of
National City Bancshares, Inc. held of record by the undersigned on March 23, 1998, at the
Annual Meeting of Shareholders to be held on May 20, 1998, or any adjournment thereof.
</TABLE>
1. ELECTION OF DIRECTORS - CLASS III (term to expire 2001)
<TABLE>
<S> <C>
FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the contrary below) [ ] to vote for all nominees listed below [ ]
</TABLE>
INSTRUCTIONS: To withhold authority to vote for any individual nominee, strike a
line through the nominee's name in the list below. To distribute your votes on a
cumulative basis, write the number of votes you wish to cast for each nominee
below that nominee's name.
Dr. H. Ray Hoops John D. Lippert Ronald G. Reherman
2. PROPOSAL TO AMEND AND RESTATE THE ARTICLES OF INCORPORATION to (i) increase
the number of the Corporation's authorized common shares from 20,000,000 to
29,000,000, (ii) authorize 1,000,000 preferred shares, (iii) eliminate
cumulative voting in elections of directors, and (iv) revise
certain other provisions.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(continued, and to be signed on the other side)
(continued from other side)
3. The Proxies are authorized to vote in accordance with the recommendations of
the Board of Directors upon such other business as may properly come before
the Meeting.
THIS PROXY CONFERS AUTHORITY TO VOTE "FOR" EACH PROPOSITION LISTED ABOVE UNLESS
OTHERWISE INDICATED. (IF ANY OTHER BUSINESS IS PRESENTED AT SAID MEETING, THIS
PROXY SHALL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF
DIRECTORS.
<TABLE>
<S> <C>
Please sign exactly as name appears below. When shares are held by joint tenants, both should sign.
When signing as an attorney, executor, administrator,
trustee, or guardian, please give full title as such. If a
corporation, please sign full corporate name by president or
other authorized officer. If a partnership, please sign in
partnership name by authorized persons.
DATED , 1998
No. of Shares Voted ------------------------------------------------
-------------
------------------------------------------------------------
Signature
------------------------------------------------------------
Signature, if held jointly
</TABLE>
PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
POSTAGE-PAID ENVELOPE.
